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Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
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Summary

The Captain James A. Lovell Federal Health Care Center (FHCC) in North Chicago, Illinois, is an effort by the Departments of Veterans Affairs (VA) and Defense (DoD) to create a national model for joint delivery of health care that is more accessible and less expensive than operating two federal medical centers serving overlapping beneficiaries in the same area. The creation of the Lovell FHCC also permits the VA to continue and even to expand inpatient services in North Chicago—where the North Chicago Veterans Affairs Medical Center (NCVAMC) had been threatened with closure—because of the additional workload provided by Navy beneficiaries after the Naval Hospital Great Lakes (NHGL) was closed.

North Chicago is the site of Naval Station Great Lakes, which houses the Recruit Training Command (RTC) and the Training Support Center (TSC). The RTC runs the Navy’s boot camp for all new enlisted recruits, and the TSC runs the “A” schools, which are advanced training programs for enlisted sailors. Each year, approximately 35,000 recruits and 16,000 A-school students spend several months at Great Lakes. NHGL’s catchment area also includes approximately 67,000 military retirees and family members. The NCVAMC was built on former Navy land, and its catchment area contains approximately 78,000 military veterans. When planning for the Lovell FHCC began in the early 2000s, NCVAMC recorded approximately 215,000 outpatient visits and 600 acute inpatient admissions per year. At the NHGL, there were approximately 600,000 medical outpatient visits, 187,000 dental outpatient visits, and 2,600 acute inpatient admissions per year.

The VA and the DoD had operated separate medical centers 1.5 miles

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
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apart in North Chicago since 1926. By the late 1990s, each was underused because of the shift of most patient care to outpatient settings. In addition, the naval hospital had become obsolete and needed to be replaced. When the NCVAMC’s inpatient operations were recommended for closure in 1999, local veterans organized to keep it open. The Illinois congressional delegation, aware that the Navy was planning to build a replacement hospital, urged the DoD and the VA to combine their services in a state-of-the-art federal health care center. Senator Richard Durbin later explained that

the aim of the delegation was to keep the North Chicago VA Medical Center open, improve options for medical care for the Navy, improve training options for VA and Navy medical personnel, reduce costs, and improve access to health care for veterans and Department of Defense beneficiaries. (Durbin, 2003)

In 2002, the assistant secretary of defense for health affairs and the VA under secretary for health—as co-chairs of the Health Executive Council (HEC)—agreed on a plan to share facilities and services in North Chicago. In a multistep process, the Navy would close its hospital and use the NCVAMC to provide emergency and inpatient care to its beneficiaries and build a shared ambulatory care center adjacent to the NCVAMC. The VA would renovate and upgrade the NCVAMC’s inpatient medical and surgical facilities and emergency department and allow Navy surgeons to practice in the VA hospital building. According to William Winkenwerder, Jr., the assistant secretary of defense for health affairs,

With this agreement, the Navy gains a modern ambulatory care center at a cost less than building a new hospital. VA beneficiaries gain increased access to surgical care closer to their homes and families. And the overall operating expenses of both departments should be reduced. (VA, 2002)

In 2003, the Navy closed its inpatient psychiatry ward and began sending patients to the NCVAMC for acute inpatient psychiatry care. In 2004, the Navy moved its blood processing center to vacant space in the NCVAMC, in return for providing a share of the blood products to the VA. The departments also agreed to move the rest of the NHGL’s inpatient and emergency care and Navy surgeons to the NCVAMC in 2006, after the VA had completed a $13 million renovation of the NCVAMC’s inpatient medical and surgical facilities and emergency room. In June 2006, Navy inpatients began to be treated at the NCVAMC, and the NHGL became the Naval Health Clinic Great Lakes (NHCGL).

In 2005, the assistant secretary of defense for health affairs and the VA under secretary for health agreed to develop a federal health care facility that would integrate clinical and administrative services under a single line

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
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of authority. The decision to adopt a single chain of command was unprecedented. The VA and the DoD had each built an ambulatory care center next to the other’s hospital in Honolulu and Albuquerque and were even sharing a “federal” hospital built for that purpose by the DoD in Las Vegas; however, in each case, the organizations operated alongside each other and billed each other for the services provided to the other’s beneficiaries. The Lovell FHCC was going to be, and still is, unique in having a single overall command structure, integrated staff, and unified budget. The intent was to create an organizational structure in which health care services could be better coordinated with patient needs, which would presumably improve the range of, the access to, and the quality of the services. The FHCC was expected to be a showplace for new software that would enable providers to enter either the DoD or the VA electronic health record (EHR), or a common interface, and see and enter information in both EHRs in real time, a capability called interoperability. It was also expected to increase efficiency—by enabling FHCC managers to match resources to needs in ways that would be impeded by having to coordinate separate bureaucracies and budgets—and to produce cost savings by eliminating duplication.

The 2005 decision to have an integrated federal health care facility also included approval for construction by the Navy of a 201,000-square-foot ambulatory care center (ACC) connected to the VA hospital building and expanded parking facilities and renovation of 45,000 square feet in the hospital building for outpatient clinics. The timeline for the completion of the ACC in 2010 gave the planners 5 years to prepare for the switch to a single organization.

IMPLEMENTATION

The HEC formed six task groups to develop the detailed operational plans for an integrated health care center.1 Each task group was co-chaired by the VA and the DoD and included local, regional, and central office representatives of each department. They met monthly, except for the leadership task group, which met weekly and coordinated the overall effort.

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1 The six were the leadership, clinical, information management/information technology, administration, human resources, and finance/budget task groups. A seventh task group, for communications, was formed later.

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
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The Vision

The local leaders of the leadership task group—the director of the NCVAMC2 and the current commander of the NHGL/NHCGL,3 as well as key members of their staffs—had a consistent vision of the way the Lovell FHCC should function to achieve its mission of providing seamless health care to all patients, regardless of their status as VA or DoD beneficiaries or as providers. The vision was to have, to the fullest extent possible, one set of organizational units and systems rather than two (VA and DoD) side by side within the FHCC. For example, the local leadership pushed for single systems for finance (e.g., purchasing, logistics and inventory, payroll, assets), personnel and human resources management, facilities management, appointment scheduling, medical records and other information management systems, credentialing, workload measurement, performance measures, and inspector general inspections. They wanted a single operating fund and budget so that the FHCC staff did not have to determine which department’s funds were being used for what purpose in daily operations. They envisioned a combined medical staff organized into single departments and clinics under one chief medical officer and operating under a single set of bylaws and one standard of care for all patients.

Constraints on Integration

The FHCC planners did not anticipate being able to fully achieve their vision because they were aware at the outset of several critical constraints that would hinder achieving full integration. For example, while one personnel system could be put into place to accommodate the Navy and the VA civilians, this was not possible for uniformed personnel. The departments agreed at the time of the 2005 decision that the FHCC director would be from the VA and the deputy director from the Navy, but pay, promotion, and disciplinary authority over military personnel could not be assumed by the VA director. It was not practical to integrate the clinical operations of branch clinics on the naval base serving enlisted recruits and students, although they were included as part of the FHCC. The law governing DoD/VA health care sharing limits it to excess capacity on the part of one department or the other, which limits the number of clinics that can schedule

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2 Patrick Sullivan has been the director of the North Chicago Veterans Affairs Medical Center since 2003 and was the associate director for the previous 6 years.

3 There have been three commanders since 2003: Captains Michael Anderson (2003–2006), Thomas McGue (2006–2010), and David Beardsley (2010–present). A new commander will be appointed in 2012. Both McGue and Beardsley were posted to North Chicago to work with their predecessors for months before taking command in an effort to preserve continuity of leadership.

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

appointments without regard to the departmental affiliation of the provider or patient.

A critical constraint was the existence of two EHR systems that had to be maintained separately although the ability to communicate patient information between them was limited. Using both systems was necessary because the Navy personnel would be using DoD’s EHRs in other locations throughout their career and veterans might use other VA medical centers if they moved or were traveling. The departments agreed to develop novel software for entering, viewing, and revising information in both EHR systems simultaneously, but they constrained the development process at the outset by stipulating that neither of them could be changed. They also left little time for the software development—less than 2 years.

Another critical constraint was the need for local leaders and staff to continue to serve their current patients without reducing access or quality while the planning and implementation of the FHCC was taking place. Most of the planning and implementation work was done by existing staff in addition to their regular work, which limited the degree of change that could be considered. Time for education and training of staff in preparation for new FHCC policies and procedures was also limited.

The biggest constraint was—and is—the existence of the three departments involved—the DoD, the Navy, and the VA. The VA and the DoD have different missions and are separately accountable for their performances to the president of the United States and Congress. Each has its own priorities and goals and associated business processes. Although the Department of the Navy is part of the DoD, it has a certain amount of discretion in how it carries out its business, which can be more specific or strict than DoD’s policies and procedures (and different from the Army’s or the Air Force’s policies and procedures).

Ultimately, no matter how seamlessly it conducts its daily business, the Lovell FHCC has to report to the Navy and to the DoD on how well it performs as a military treatment facility (MTF) and to the VA on how well it performs as a VA medical center (VAMC). This set of dual standards and reporting requirements is an extra burden for the FHCC compared with what is required for an MTF or a VAMC. It also limits the feasibility and cost effectiveness of integrating functions. For example, the VA and the DoD have different standards for timeliness of routine medical appointments, that is, within 14 and 7 days, respectively, which must be tracked and the performance reported. This is part of the reason the FHCC has separate call centers and primary care clinics for VA and DoD beneficiaries, using the Veterans Health Information Systems and Technology Architecture (VistA) and the Armed Forces Health Longitudinal Technology Application (AHLTA), respectively. Even when the departments have agreed on a single system, for example, for workload accounting or purchasing supplies,

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
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there must be an additional process performed after the fact to account for and to report the activities in different formats to the parent departments.

Resolving Obstacles to Integration

The task groups began by identifying all policies, regulations, and statutes specific to each department’s administrative operations that would have to be modified or waived to allow for the integration of health care services and the development of recommendations for resolving differences that would affect the implementation of FHCC operations. Some of the main areas of difficulty were identified:

  • Choosing a governance model
  • Choosing whether to designate the facility as a DoD medical facility, a VA medical facility, a network provider, or a hybrid
  • Determining the budgeting and reimbursement methodology
  • Determining who would own and maintain the property, especially the ACC
  • Deciding on the logistics system to put into place
  • Choosing (with two different EHR systems) either AHLTA (DoD) or VistA (VA), operating both side by side, or developing interoperability solutions
  • Choosing (with two civilian personnel systems) between Title 5 (DoD) or Title 38 (VA), or using both
  • Determining how to privilege independent duty hospital corpsmen and hospital corpsmen
  • Handling adverse events involving military personnel

The approach taken to resolve most of these issues and many others involved a three-step process. The first step was for the appropriate task group to draft an executive decision memorandum (EDM). The second step was to seek approval of the EDM up each level of the respective departmental chains. The third step was approval of the EDM by the co-chairs of the HEC.

Developing the EDMs was generally a lengthy process involving numerous revisions. They were circulated locally first, and then at the regional and national levels, which generally involved multiple offices within the VA, the Navy, and the DoD. The Office of Management and Budget and the Executive Office of the President reviewed matters involving legislation or funding. Most aspects of the Lovell FHCC operations required higher-level approval, usually changes in the standard procedures or program policies of one department or the other or of both. The task groups spent a great deal of time trying to identify who needed to be consulted and arranging

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

to bring them to the table to make decisions. Most of the EDMs were not signed until July 2008, 3 years after the start of the process.

The obstacles to integration addressed by the EDMs and by other means were resolved to varying degrees, depending on the obstacle. (The resolution to the problem of incompatible information management/information technology [IM/IT] systems was handled differently—at the national level—and is summarized below.) In some cases, a solution allowing integrated operations was reached. For example, the departments agreed to use the VA administrative systems for most financial matters—for example, accounting, purchasing, inventory. The Navy civilians were integrated into the VA personnel system. Accounting for the applicable VA and DoD expenses is performed after the fact through a reconciliation process that is seamless to FHCC staff.

In other cases, integration proved to be impossible. For example, the departments could not agree on a single clinical credentialing system although both were designed to meet the same Joint Commission requirements. The law enforcement and protection function could not be integrated because the Navy’s masters-at-arms could not be deployed off the Navy base due to the Posse Comitatus Act, which generally prohibits the use of the military for domestic law enforcement. A small number of Navy IM/IT civilians were not transferred because only DoD employees can access certain computer systems. The VA does not have authority for personal services contracts (PSCs), so the Navy retained the responsibility for maintaining nearly 300 PSCs used to staff the branch clinics on the Navy base.

Other solutions involved exemptions. The major example is the funding of the branch clinics on the Navy base that exclusively serves recruits, students, and active duty staff. They are part of the Lovell FHCC’s budget, but the funds are passed directly through to them rather than accounted for as part of the reconciliation process. Similarly, the nursing home and long-term care programs for veterans are funded by the VA as direct pass-throughs.

In most cases, the solutions were compromises. For example, the Navy relented on its requirement of a secret clearance for access to patient records in the DoD EHR system. However, it required a more intensive security clearance investigation than the VA’s—the Access National Agency Check with Inquiries (ANACI) versus the National Agency Check with Inquiries—although VA personnel were allowed a grace period of 1 year to undergo the ANACI investigation. Also, it was impossible to agree on a single computer access card, so military personnel use the DoD common access card and VA personnel use the VA personal identity verification card, each programmed to access the other’s system.

The security clearance example illustrates the extensive time and effort expended in developing and coordinating the integration process. The DoD/VA memorandum of understanding was not signed until after October 1,

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

2010, when the Lovell FHCC became official. This, along with undelivered IM/IT interoperability solutions, was a factor in delaying the move of the Navy outpatient clinics until after the middle of December 2012.

Ultimately, legislative authority had to be obtained to resolve some matters. The Lovell FHCC planners were directed to resolve differences within existing law as much as possible, but four issues could not be resolved without legislation4:

  1. Allowing DoD beneficiaries to use the Lovell FHCC as they had the NHCGL, that is, without paying deductibles and copayments. Legislation was needed to designate the FHCC as an MTF so that copayments for TRICARE beneficiaries could be waived.
  2. Enabling the Lovell FHCC to manage the facilities on the west campus as a unit. This required legislation authorizing the transfer of the ACC to the VA.
  3. Enabling the Lovell FHCC to administer a uniform human resources program for civilian employees. Legislative authority was required to transfer civilians from the DoD personnel system (Title 5) to the VA personnel system (Title 38).
  4. Permitting the Lovell FHCC to budget and spend funds for an integrated operation. This required legislation authorizing the establishment of a Department of the Treasury (Treasury) fund to allow pooling of DoD and VA funds.

Legislation containing the needed authorities was introduced as an amendment to the National Defense Authorization Act (NDAA) for fiscal year (FY) 2009 but was not adopted until late 2009 as part of the NDAA for FY 2010, which created an extra year of uncertainty. The legislation was more limited in some ways than had been hoped. The Lovell FHCC was designated as an MTF only for purposes of eligibility and cannot take advantage of the other benefits of being an MTF. The FHCC could not take full advantage of efficiencies to reduce costs because the personnel transfer came with provisos that no one would lose his or her job or have his or her pay reduced. In addition, the legislation only applies to the FHCC as a 5-year demonstration project and cannot be used to establish other federal health care centers.

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4 A separate bill was required in 2009 to name the North Chicago Federal Health Care Center after retired Navy Captain James A. Lovell, commander of Apollo 13, who lives in the North Chicago area.

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

Limited Interoperability of Electronic Health Record Systems

In keeping with the Lovell FHCC vision, the clinical task group recommended having one patient record system, or at least a single-user interface between the DoD and the VA EHR systems, for entering and retrieving patient clinical information. The IM/IT task group was able to accomplish little, given the size of the task and the resources required. The lack of progress became urgent by 2008, given the lead time needed to develop software interoperability solutions for single entry into both systems. At this point, the VA and DoD enterprise (i.e., national) IT offices were directed to identify and develop the minimum set of capabilities needed to make the FHCC functional by October 1, 2010. It took time to identify the minimum capabilities (early 2009), develop the technical requirements, obtain the funding (more than $100 million from the Joint Incentive Fund) and award the contracts (late 2009 for the VA and early 2010 for the DoD because its budget was under a continuing resolution).

The first capabilities—single registration and single medical sign-on—were not delivered until December 2010. Orders portability for radiology was delivered in June 2011 and for laboratory in March 2012. The final two capabilities, orders portability for pharmacy and for consults, were not delivered as of the date of this report and are not expected until 2014 at the earliest.

The lack of interoperability requires time-consuming manual workarounds by clinical and support staff to keep both the DoD and the VA EHR systems current. For pharmacy services, it is necessary to have five pharmacists devoted full time to manually check for drug interactions and allergies. This hinders the Lovell FHCC’s ability to efficiently provide safe and seamless care to DoD beneficiaries as they move from place to place within the FHCC.

RESULTS

The Lovell FHCC is unique among health care joint ventures in having a single command structure. FHCC proponents expected this structure to result in more integrated clinical and administrative operations. In turn, the integration was anticipated to lead to better care being provided at less cost to area DoD and VA beneficiaries than would have occurred if the separate VA and Navy medical centers had been maintained. According to the executive agreement (EA) among the VA, the DoD, and the Navy, the FHCC was expected to result in more accessible, higher-quality, and less costly health care; meet military readiness standards; maintain high patient and provider satisfaction; and increase research and training opportunities.

These outcomes are analyzed in detail in Chapter 4. In brief, as of June

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

2012, when information gathering for this report was completed, the shift from separate commands to a single, more integrated organizational structure on October 1, 2010, has not had a significant effect on trends in most available outcome measures in either the positive or the negative direction.

Unfortunately, data on changes in efficiency and cost savings are not readily available. However, given that no one could lose his or her job or receive less pay, and that the Lovell FHCC is receiving the same funding in its first 2 years as it did the year before it was launched, adjusted for inflation, one would not expect major cost reductions. There might be efficiencies—doing more with the same amount of funding—but this would be hampered by the limited degree of integration within the clinical and administrative departments. In addition, the need to operate two EHR systems manually is widely acknowledged to be significantly reducing clinical efficiency. FHCC planners expected a temporary loss of clinical efficiency (i.e., number of patient encounters per provider) of 10 to 15 percent because of the learning curve in using the new interoperability solutions, but interviewees indicated that the loss has been closer to 20 percent and was continuing.

CONCLUSIONS

The Institute of Medicine was asked to form a committee to evaluate the merger of a Navy MTF and a VAMC in North Chicago into a federal health care center in terms of its benefit to the DoD and the VA compared with maintaining separate VA and DoD facilities. Specifically, the sponsor asked the committee to undertake—but not be limited to—six tasks (see Box S-1).

In addition to addressing each of the tasks outlined by the sponsor, the committee developed six recommendations regarding the Lovell FHCC.

STUDY TASKS

Task 1: Assessment Criteria

Task 1 asks for criteria for assessing the “success” of the FHCC demonstration in the short term and the longer term. The committee recommends below (Recommendation 3) that the DoD and the VA conduct a comprehensive evaluation of the Lovell FHCC demonstration designed to provide the basis for determining at the end of the 5-year demonstration period whether the FHCC model has been a success and whether it should be adopted in other locations where the VA and the DoD share health care markets. Appendix B contains the framework for such an evaluation that could be adopted by the VA and the DoD. The framework considers short-

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

BOX S-1
Substantive Study Tasks
*

  1. Establish criteria for near-term and longer-term assessment of the success of facility integration that can be used in follow-on assessments. Determine if success criteria would be different if the partner DoD health care facility was supporting operational units instead of basic/advanced training units, such as the Navy Health Center Great Lakes.
  2. Evaluate whether performance benchmarks that DoD and VA have established in their executive agreement have been achieved.
  3. Examine the lessons learned from similar mergers elsewhere in the federal and private health sectors that may be applicable to DoD/VA mergers.
  4. Evaluate the most pressing concerns of the stakeholders and recommend ways to mitigate or eliminate these concerns.
  5. Evaluate the specific impact of the merger on the level and quality of training received by active duty medical personnel and VA providers.

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* The sixth task was to prepare a written report with findings, conclusions, and recommendations for the DoD and the VA that will be available to the general public.

term outcomes to be those observed in the first year or two and long-term outcomes to be those that emerge after 3 to 5 years.

The EA for the Lovell FHCC identifies the desired outcomes. They are (compared with operating separate VA and DoD health care centers in the same health care market): more accessible health care, higher-quality health care (e.g., more preventive services and continuity and coordination of care), cost savings or cost avoidance, increased market share among eligible beneficiaries, greater patient satisfaction, greater provider satisfaction, improved clinical proficiency of active duty providers, improved training programs, and better research opportunities. The outcome criteria of most importance are financial, such as the net reduction in costs per episode of care or procedures; clinical, such as the numbers of preventable drug-drug interactions and allergic reactions to drugs; patient-focused, such as time to third appointment and standardized patient satisfaction survey results; and in the case of the Lovell FHCC, military operational readiness-focused, such as the percentage of recruits unable to graduate on time for medical reasons. The evaluation framework in Appendix B suggests some intermediate-term outcomes, such as higher patient volume and quality of care measures. Other metrics take longer to collect and analyze and are listed as long-term outcomes, such as cost per patient, increased market share, and health status of patients.

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

The committee was also asked to consider the differences in assessment criteria for FHCCs serving training units (such as the RTC at Great Lakes) and those serving operational units. Operational units are more varied, with more complex, mission-related medical issues than training units are, and they require medical personnel with knowledge of military medicine and who respect the unique cultural identity of servicemembers in operational units. Administrative business functions would be similar for medical units serving training and operational units. Despite the differences between training and operational units, however, the criteria for success in an operational versus a training unit would be similar, although the benchmarks might be set at different levels.

Task 2: Performance Benchmarks

The departments specified 15 “integration benchmarks” intended to measure the degree of integration success. As of June 2012, most scores had stayed the same as they were at baseline. Two measures scored a one or a two in June 2012 and therefore have not achieved a successful score: (1) the DoD component of evidence-based health care and (2) IM/IT implementation. The failure to achieve evidence-based health care goals is attributed to vacancies in the active duty provider workforce due to rotation and deployment. The delay in implementation of joint IM/IT capabilities is critical to services integration at the Lovell FHCC and is unlikely to improve further until parts of the new EHR system being developed jointly by the DoD and the VA become available, beginning with a joint pharmacy program scheduled to be operational in 2014.

Task 3: Lessons Learned from Other Federal and Private-Sector Health Care Mergers

The committee addressed the third task by commissioning a comprehensive overview of the private-sector health care merger literature and analyzing the lessons learned reported by the nine VA/DoD joint venture sites. The review of the private-sector merger literature appears in Appendix D, “Collaboration Among Health Care Organizations: A Review of Outcomes and Best Practices for Effective Performance,” and is summarized in Chapter 5. The lessons learned from the VA/DoD joint ventures reported at the annual joint venture conferences are also summarized in Chapter 5, and short profiles of the individual joint ventures and the lessons learned they have reported are in Appendix C, “Department of Veterans Affairs/Department of Defense Joint Ventures: Brief Histories and Lessons Learned.”

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

Task 4: Stakeholder Concerns

The committee was not able to conduct a statistically valid survey of the most important stakeholders, the patients. However, the committee heard from stakeholders, including several veteran and retired military enrollees at the Lovell FHCC, at its third meeting, held in North Chicago.

The commanding officer of the RTC, who receives daily reports on recruits being seen at the west campus emergency room or admitted to the hospital, said that the FHCC was performing as well as the Naval Hospital/Health Clinic Great Lakes had been, for example, in the percentage of recruits unable to go to their next assignment for medical reasons.

The president of the affiliated medical school, the Rosalind Franklin University of Medicine and Science, had a positive view of the effect of the Lovell FHCC merger on medical education and training and on research opportunities because the merger has created a larger and more varied clinical staff and patient mix.

The veterans testified that they were satisfied with the care they were receiving at the Lovell FHCC but had two major concerns, namely, the time it takes to fill prescriptions was much longer than before the merger (although the wait times had shortened significantly more recently) and the safety of locating the mental health clinic on the third floor of the ACC next to a railing over an open three-story atrium.

Task 5: Staff Training

The committee did not find that staff training was affected by the merger except in one area, which was of special concern to the Navy when agreeing to merge clinical operations with the VA in the FHCC. The concern was whether independent duty corpsmen (IDCs) and active duty advanced practice nurses (APNs) would be able to practice their skills in the merged FHCC, especially in the inpatient setting. As described in Chapter 3, special training of VA staff on the duties of corpsmen was provided, and several compromises were reached to allow APNs and IDCs to maintain needed clinical proficiencies at the Lovell FHCC.

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

RECOMMENDATIONS

Develop Uniform Policies, Procedures, and Business Practices for Federal Health Care Centers

Findings

The implementation of the Lovell FHCC highlights the difficulty of achieving unified policies and procedures when each parent department has its own planning, operating, and reporting procedures for the same health care center functions.

Recently, the VA and the DoD agreed to develop a unified approach at the enterprise level in some cases rather than to try to facilitate local solutions. Prime examples of joint enterprise-level solutions include the efforts to develop a joint EHR system (the integrated EHR, or iEHR) and the joint disability examination process for wounded, ill, or injured servicemembers (the Integrated Disability Evaluation System, or IDES). These agreements resulted from top-down directives from the DoD and VA secretaries, who are personally monitoring progress through regular meetings.

Conclusions

Additional opportunities remain to develop enterprise-level solutions to differing departmental requirements and business practices. This would enable more cost-effective joint health care delivery collaborations, whether they are DoD/VA joint ventures or FHCCs. An example of an opportunity to work out a common approach would be a unified process for credentialing health care providers. Other opportunities include uniform cost accounting, civilian workforce policies, performance and quality measures, access to care standards, drug formularies, and mail-order drug refill programs. The more that common policies and processes are adopted, the more integrated FHCCs can be, which in turn should increase opportunities to achieve more accessible and cost-effective patient care.

RECOMMENDATION 1. Before establishing additional federal health care centers, the Department of Veterans Affairs and the Department of Defense should agree on a governance plan and common policies and procedures for joint health care delivery functions.

Achieving additional enterprise-level agreement on single policies and processes is a critical first step in planning additional future FHCCs and would also assist the Lovell FHCC in reaching its full potential.

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

Complete Development of a Jointly Usable Electronic Health Record System Before Establishing Additional Federal Health Care Centers

Findings

The IM/IT goal for the Lovell FHCC is to “safely interface VA and DoD legacy systems to support an integrated DoD/VA facility with multiple care locations” (Filippi, 2011). The Lovell FHCC expected the software capabilities that its clinicians and other subject matter experts had identified in early 2009 as the minimum needed for integrated use of the VA and the DoD EHR systems to be in place when the FHCC opened on October 1, 2010, but they were significantly delayed. These included single registration and single sign-on (implemented in December 2010), orders portability for radiology (implemented in June 2010), and orders portability for laboratory (implemented in March 2011). Two capabilities are still not ready for implementation, namely, orders portability for pharmacy and for consults, and are not expected to be ready for several years.

Conclusions

The lack of EHR interoperability, despite the development of workarounds (such as hiring five pharmacists to manually check both EHR systems for possible drug allergies and interactions), significantly reduced the efficiency of health care delivery for at least the first year of Lovell FHCC operations. The lack of single-entry access to both EHR systems has hindered the ability of the Lovell FHCC to deliver higher-quality or more efficient, cost-effective health care and to provide better research opportunities. The ability to seamlessly deliver electronic health information from the veteran, military beneficiary, and health care provider perspectives should be the hallmark of an FHCC.

RECOMMENDATION 2. Additional federal health care centers should not be implemented until an interoperable or joint Department of Defense/Department of Veterans Affairs electronic health record system becomes available.

The DoD and VA secretaries have committed their departments to developing such a system together—a new joint EHR system (the iEHR)—rather than upgrading their current (now legacy) EHR systems and trying to develop interoperability solutions. The iEHR will be developed in phases with some modules, such as pharmacy, scheduled to be completed in 2014; the final modules are due for completion in 2017. It would be helpful for the iEHR to have the capabilities identified by the FHCC clinical task group

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

as the initial set of core IT capabilities required by the Lovell FHCC earlier rather than later in the development process if establishing additional FHCCs is a priority.

Develop Criteria for Selecting Future Federal Health Care Center Sites

Findings

The VA and the DoD have developed criteria for identifying “joint market areas” for increased health care sharing. These are health care markets with large DoD and VA beneficiary populations where shared facilities and services would provide access to services or infrastructure not available in one or the other organization; improve efficiency through economies of scale; reduce duplication of services, infrastructure, or both; and mitigate the impact of deployment on access.

The VA and the DoD have adopted a definition of joint ventures. They are local alliances or partnerships formed to facilitate comprehensive cooperation, shared risk, and mutual benefit, and they are expected to last at least 5 years. To qualify as a joint venture, the departments look for regular ongoing interactions in at least several of the following areas: staffing, clinical workload, business processes, management, information technology, logistics, education and training, and research capabilities.

The VA and the DoD have not defined FHCCs and do not have criteria for choosing their locations. The Lovell FHCC is considered to be unique and is no longer a joint venture.

Conclusions

To a large extent, the criteria should address the juncture at which FHCC lower operating costs or greater effectiveness are shown to outweigh the associated significant implementation costs (i.e., a single organizational structure and integrated administrative and clinical processes) enough for the FHCC structure to be regarded as preferable to a joint venture sharing arrangement and its comparative cost effectiveness. At this time (June 2012), the costs of implementing the Lovell FHCC have been substantial, while efficiencies and cost savings that might be expected have had a limited time to transpire.

The VA and the DoD should base a decision to establish another FHCC on evidence that it would provide higher performance in quality, access, or cost effectiveness compared with other arrangements, including a joint venture agreement. An important source of evidence on the costs and benefits will be the comprehensive evaluation of the Lovell FHCC recommended below.

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

RECOMMENDATION 3. The Department of Veterans Affairs and the Department of Defense should develop criteria for selecting future federal health care center (FHCC) sites. The criteria should address the costs and benefits of establishing a fully integrated organization compared with the costs and benefits of other collaborative arrangements, such as joint ventures, taking into account local health care market trends, institutional capabilities and readiness, unique local circumstances, and departmental limiting factors. Only when firm criteria based on cost savings and the expectation of enhanced health care service delivery are met should the concept of a future FHCC be considered.

Analyze and Promulgate Lessons Learned from the Lovell Federal Health Care Center Experience

Findings

The leadership of the Lovell FHCC encountered numerous issues that had to be resolved to achieve an integrated organization and uniform policies and procedures. Many of the issues resulted from conflicting policies and procedures of the VA, the DoD, and the Navy. Some were the result of statutory requirements and the lack of statutory authority.

Many of the issues have been resolved by adopting the policy or procedure of one department with the agreement of the other department. In some cases, agreement on a single policy or procedure could not be reached and workarounds had to be developed to meet the requirements of the two departments. Some issues could not be resolved because of irreconcilable policy differences, such as an integrated police force including active duty masters-at-arms on the west campus. Ultimately, four critically necessary actions had to be authorized by legislation: (1) the authority to transfer civilian employees from one department to the other; (2) the authority to transfer the ambulatory care center and other Navy-built facilities and related personal property and equipment from the DoD to the VA; (3) the authority for the DoD to transfer funds to a joint Treasury account under the VA; and (4) the authority for DoD beneficiaries to be treated by the Lovell FHCC as they would be at an MTF. However, the legislation authorized these only as part of a 5-year demonstration in North Chicago.

Every difference between VA and DoD policies and procedures had to be addressed at multiple regional- and headquarters-level decision points. This often took months, and sometimes years, to resolve through numerous drafts and meetings. The extra burden of this process was very heavy, especially at the local level where planning the integration was an extra duty for most staff members.

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

Conclusions

The implementation of the Lovell FHCC provides a road map to issues that will be encountered in any future attempts to establish FHCCs and offers many examples of ways to overcome or bypass those impediments. It would be extremely beneficial for planners of future FHCCs, and in many cases for existing and future joint ventures, to adopt solutions developed and already approved by the VA and the DoD without having to undertake the long negotiation process that the FHCC had to go through. An important, groundbreaking contribution would be made by the FHCC staff if they developed joint DoD/VA guidance materials, including a best-practices document or guidebook to disseminate local solutions or “fixes” arrived at to solve problems that arose in the implementation of the merger.

RECOMMENDATION 4. The Department of Veterans Affairs and the Department of Defense should systematically compile and analyze the lessons learned from the Captain James A. Lovell Federal Health Care Center merger experience, including both what and what not to do, and disseminate them through onsite consultation, webinars, technical assistance, and other means to other federal health care center sites considering joint ventures and related collaborative arrangements.

Conduct a Comprehensive Evaluation of the Lovell Federal Health Care Center Demonstration

Findings

The Lovell FHCC has been in operation for less than 2 years and is still implementing parts of the integration plan. It is too early to tell how successful the overall integration effort has been or will be when the demonstration period ends in 2015. That there have been substantial one-time costs is clear, but whether these have led or will lead to lasting efficiencies or can be adopted by future FHCCs to avoid unnecessary costs is not yet known.

The Lovell FHCC is tracking certain performance indicators designed to inform about the relative degree of success or failure, for example, if the facility is providing poor, less, or more expensive care; hurting operational readiness; reducing patient satisfaction and staff morale; or providing fewer education and research opportunities. However, the VA and the DoD have not adopted a comprehensive evaluation plan to judge objectively the success of the Lovell FHCC at the end of the 5-year demonstration period and to help them to decide whether the Lovell FHCC would be applicable in other locations.

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

Conclusions

Without a formal evaluation plan, the success of the integration effort will be more difficult to determine after the 5-year demonstration period than it should be because not all the data needed for an evaluation are being collected prospectively.

RECOMMENDATION 5. In considering the Captain James A. Lovell Federal Health Care Center merger and future collaborative arrangements, the Department of Veterans Affairs and the Department of Defense should develop a comprehensive evaluation framework with defined and measurable criteria for assessing performance that take into account local and national contexts, organizational capabilities and readiness, implementation plans, intermediate outcomes, and likely long-term impact.

Expand the Knowledge Base on Federal Health Care Collaborations

Findings

The DoD and the VA have not systematically analyzed the experience of the Lovell FHCC and the lessons that may be learned from it in considering if and where to establish additional integrated health care centers modeled after the Lovell FHCC merger.

Conclusions

The Lovell FHCC offers a number of lessons learned about what works well—and what does not—that would be useful to future FHCC decision makers and planners. The mergers of private-sector health care organizations do not provide adequate models for integration of federal health care organizations because they are narrowly based on increasing market share and revenue and usually do not involve clinical integration, only administrative consolidation. Published studies demonstrate substantial variation in performance after collaborative ventures. Nonetheless, lessons learned and pertinent data would be useful for both the Lovell FHCC and future endeavors (Appendix D contains a paper commissioned by the committee on the experiences of VA/DoD joint ventures and private-sector health care mergers).

RECOMMENDATION 6. The Department of Veterans Affairs (VA) and the Department of Defense (DoD) should fund studies to address the key findings and questions raised by the experiences of the Captain

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

James A. Lovell Federal Health Care Center merger and other VA/DoD collaborative arrangements. These studies should address the implementation issues involved in establishing collaborative arrangements, including leadership, governance, communication, organizational culture, coordination, incentives, and related factors associated with improved access, quality, slowing of the increase in the cost of care, and military readiness.

REFERENCES

Durbin, R. 2003. Remarks on the Senate floor on an amendment to the Departments of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act, 2004, relating to VA-Navy sharing of facilities at the North Chicago VA Medical Center. Congressional Record 149(Pt. 21):S14511. http://www.gpo.gov/fdsys/pkg/CREC-2003-11-12/pdf/CREC-2003-11-12-pt1-PgS14506.pdf (accessed July 25, 2012).

Filippi, D. 2011. James A. Lovell Federal Health Care Center IT informational brief. Presentation by the director of the DoD/VA Interagency Program Office to the Institute of Medicine Committee on Evaluation of the Lovell Federal Health Care Center Merger at its first meeting, Washington, DC, February 25.

VA (Department of Veterans Affairs). 2002. VA and DoD agree on health care in North Chicago. VA press release, October 18.

Suggested Citation:"Summary." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
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The 2010 opening of the Captain James A. Lovell Federal Health Care Center (FHCC) created a joint entity between the Department of Defense (DoD) and the Department of Veterans Affairs (VA) that replaced two separate centers in North Chicago. VA and DoD leaders envisioned a state-of-the-art facility that would deliver health care to both DoD and VA beneficiaries from northern Illinois to southern Wisconsin, providing service members and veterans seamless access to an expanded array of medical services. Unprecedented for the military and the VA, the Lovell FHCC would integrate clinical and administrative services under a single line of authority.

The DoD asked the IOM to evaluate whether the Lovell FHCC has improved health care access, quality, and cost for the DoD and the VA, compared with operating separate facilities, and to examine whether patients and health care providers are satisfied with joint VA/DoD delivery of health care.

Evaluation of the Lovell Federal Health Care Center Merger: Findings, conclusions, and Recommendations finds that initial implementation of the Lovell FHCC has provided important lessons about how to integrate VA and DoD health care services and has identified remaining obstacles that the departments could overcome to make such mergers more effective and less costly to implement. The IOM recommends that the VA and the DoD develop a comprehensive evaluation plan to objectively judge its success or failure, with measurable criteria, that would provide essential knowledge for both the Lovell FHCC and future endeavors.

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